Amazon starts food retail venture with pilot in Pune: Report

Amazon starts food retail venture with pilot in Pune: Report
Photo Credit: Shah Junaid/VCCircle
19 Feb, 2018

E-commerce firm Amazon India is quietly rolling out its ambitious food retail venture in India, starting out with Pune, according to a media report.

Under the pilot programme rolled out in the city, Amazon operates as a vendor on the e-commerce website, The Economic Times reports. A pan-India rollout, says the report, would take at least a quarter.

The venture will sell third-party items as well as Amazon’s food products produced and packaged locally. Singapore-based Amazon Corporate Holdings Pvt. Ltd holds 99% stake in the venture and the remaining 1% is owned by Amazon.com Inc, Mauritius.

“We continue to be on track to launch our food retail business in India,” an Amazon spokesperson said in an email response to queries. 

The development comes after US-based Amazon had secured the government’s nod to invest $500 million (Rs 3,228 crore) in India’s food retail sector in July last year. In 2016, the government had allowed 100% foreign direct investment (FDI) in the food processing sector.

Home-grown online grocery space players BigBasket and Grofers, too, have received government approval to invest in the food-only retail business.

Interestingly, BigBasket, which recently raised $300 million (Rs 1,921 crore) in a Series E round of funding led by Chinese e-tailer Alibaba, had rejected a 100% buyout offer from Amazon.

‘$500 mn investment’

Commenting on the proposed $500 million investment in food retail, Amazon India head Amit Agarwal in a recent interview with TechCircle had said, “That investment is in improving our grocery offerings by organising our supply chain. There is a lot of wastage happening between the manufacturing and consumption time. We believe we can leverage our experience in supply chain. As far as physical stores go, we don’t share details of what we may or may not do. Our current focus is very squarely on the online side of things.”

Amazon’s foray into food retail business makes it the first foreign ecommerce player to stock and sell food products directly to customers in India.

Amazon also offers online delivery of groceries and daily essentials through its app Amazon Now and its online supermarket service Amazon Pantry.

Rival Flipkart

Meanwhile, Indian ecommerce behemoth Flipkart had announced a soft launch of grocery delivery under Supermart in November 2017 in a second attempt at the grocery business. Also, US-based offline and online retailer Walmart Stores Inc. is in advanced stages of talks to buy a significant minority stake in Flipkart